As inflation, interest rates and Covid-19 mortalities continue to rise in the United States, the only thing that appears to be sliding across the pond is President Joe Biden’s dismal poll numbers.
The latest poll of polls from election gurus FiveThirtyEight shows Biden’s approval ratings have slumped to 41 per cent, a 14-point drop on this time last year, amid increased geopolitical uncertainty and a full-scale cost of living crisis.
With mid-term elections looming and the Democrats looking to cling on to threadbare majorities in both the Senate and the House of Representatives, the Biden administration could turn its attention to oil prices, hoping to find the necessary levers to stem sustained market rallies and reduce everyday prices for millions of Americans.
Oil prices have been on a wild journey since the emergence of Covid-19 nearly two years ago, dropping like a stone to below $20 per barrel in April 2020, before recovering through a succession of consequent market rallies as demand has rebounded and restrictions have eased.
Both major benchmarks have been flirting with $90 per barrel in recent days, and there is increased speculation prices could soon breach the historic $100 per milestone for the first time in eight years.
Yesterday, Brent Crude prices held firm at $86.70 per barrel, while WTI Crude has also remained resilient at $83.83.
America’s attempts to head off market rallies during this window of recovery have so far proved fruitless. Biden’s demands for OPEC to boost supplies at higher rates have fallen on deaf ears, with the organisation committed to conservative increases of 400,000 barrels per day.
More embarrassingly, his attempts to gather the Avengers and organise coordinated releases of strategic reserves with allies such as China, Japan, India and the UK have struggled to make a dent in the market.
The US remains the world’s largest oil producer, but like most developed G20 economies it is committed to green transition plans over the coming decades, constraining its ability to drill its way out of the current crisis and bolster domestic production.
Speaking to City A.M., Ole Hansen, head of commodity markets at Saxon Bank, said: “President Biden’s tool box looks increasingly empty at this point, not least given his administration’s focus on decarbonization and climate change, which is making it hard for him to encourage an increase in domestic production.”
Edward Moya, senior market analyst at OANDA, also felt Biden had “very few options” and that tapping reserves would only “deliver short-term relief” of around 25 cents per gallon at the pumps.
Forecasting Biden’s next move, Moya said: “The White House will most likely resort to more pleas to the Saudis to pump more oil.”
Ultimately, the US could be powerless to influence prices irrespective of Biden’s actions, with the International Monetary Fund warning any conflict between Russia and Ukraine could overpower any measures forwarded by governments.
Gita Gopinath, the fund’s deputy managing director, gloomily argued yesterday that conflict would mean “further increase in prices of oil and natural gas, and therefore of energy costs more broadly, for many countries in the world”.